I was driving home the other day and worrying about money. Hands up all those who have had that similar experience. I was wondering where all my savings had gone over the last couple of years. I thought back to the pandemic and the lockdowns. I remembered the concern expressed by governments about the wellbeing of their citizens. Since then, however, we have been in the grip of record high inflation and a cost of living crisis. Food prices have been really high. Rents have been going through the roof. Energy prices have cost us a lot at home and to run our vehicles. WTF? Why have we had all these price rises across the board? The truth is, quite simply, corporate greed. Australians have been betrayed by their institutions and companies.
Corporate Australia & Price Gouging For Profit
Governments handed out a lot of money to help those struggling during the pandemic. Billions of that assistance was given to companies rather than individual workers. Many of those businesses did not need all that extra money and reported strong profits. Very little was ever paid back because businesses don’t operate in that manner. Due to public health policies like lockdowns lots of folk were pent up with the desire to spend their money. We live in a consumer society and people express themselves via their consumption. Corporate Australia saw this as a great opportunity to profit from the perfect storm of cashed up consumers and really strong demand.
“When the Australia Institute looked at the numbers, we concluded that excessive corporate profits were largely responsible for driving the lion’s share of the burst of inflation that followed COVID lockdowns. The findings were dismissed and some people even demanded we retract our research. However, the OECD—run by former Finance Minister Matthias Corman—released research that used a similar methodology and found basically the same thing as the Australia Institute: that corporate profits contributed far more to Australia’s rise in inflation than wages and other employee costs.”
Accountants Factoring In Zero Competition In Markets
When inflation started to uptick due to price rises internationally for freight costs during the pandemic the bean counters at the oligopolies in Australia started to calculate numbers. The spate of mergers and takeovers at the big end of town had resulted in the greatest concentration of market share in too few hands Australia had ever seen. The supermarket duopoly of Coles and Woolworths controlled the grocery and liquor markets. The airline business by Qantas and Virgin. The financial sector was tied up by the big 4 banks. The telecommunication business was in the hands of 2 big players. Insurance in a similar situation. The media was another corporate oligopoly. Indeed, everywhere you looked. Advertising – Google and Facebook. Gas. Oil. Mining. Consultancy/auditing firms. Real estate. The markets were controlled by a couple of really big companies to the detriment of consumers. This enabled them to price set without fear of competition. This was what years of ACCC and government failures had produced. Remember the Coalition and their neoliberal economic policies which dismantled the controls we had in place in the media business for many years. Governments became really good at looking the other way. Of course, generous corporate donations to political parties didn’t go astray. These corporate interests lobbied for more unrestrained market power. The Howard, Abbott, Turnbull, and Morrison governments acceded to their demands. The ALP was complicit too during the hey days of neoliberalism..
Record Profits Declared During A Cost Of Living Crisis
Corporate Australia put up its prices to meet the higher costs of production and then some. We have seen record profits declared by the big 4 banks. Record profits by Qantas. By Woolworths and Coles. By the insurance companies. Record profits by the gas companies extracting resources from our land. Oil companies making record profits. In Australia, we don’t like to tax the multinational miners and fossil fuel companies making billions from selling our resources. We have so many subsidies for them that one wonders WTF is going on?
“In Norway they tax their gas industry heavily and give their kids free university degrees. In Australia we subsidise the fossil fuel industry and charge our kids a fortune to go to university. The federal government collects more from HECS-HELP repayments than it does from the petroleum resource rent tax, which was designed to make sure Australia receives its “fair share” of revenue from the gas industry.”
Decades of neoliberal BS about the trickledown effect benefits of doing very generous deals for miners and fossil fuel multinationals by leaders like Abbott and Morrison has left most people high and dry. Australians are not being adequately reimbursed via taxation revenue for government services by these giant companies. Deals have been done by politicians which have benefitted their parties and provided individual pollies with generous job opportunities post their political careers. How many times have you seen an ex-resource minister bob up as a paid lobbyist in his next incarnation post public service? Too many times for it to even attract condemnation in Australia. Are Australians particularly dumb or too cynical for their own good?
The RBA & Maintaining The Power Status Quo
Australians have been betrayed by their institutions and companies. The RBA are a bunch of bankers who cosy up to big business and never criticise those putting up prices. No, opprobrium is reserved for warnings about wage increases for workers contributing to high inflation. Steeply rising interest rates have made the cost of living crisis much worse for those who can least afford it. Monetary policy by central banks and the reliance on this one lever is out of touch with the modern economy. What have the RBA said about the lack of competition in Australia for consumers! Bugger all. The RBA is always slow to act and even slower to stop acting when it comes to monetary policy moves. Giving the RBA more power is just dumb. This is a body that lacks representation on it from workers and the greater community. A bunch of bankers who hang around with business leaders from the big end of town. They bang the same gong no matter because that is what they have always done and what the central bank in the US does. Quantitative easing (QE2) was another inflationary stimulus which made things worse here and globally.
The Victors In The 2 Speed Economy
But wait let’s stop and have a 2 minute silence in reverie for the third of Australians who have bought their own home. For the wealthy among us who have benefitted greatly from the capital gains tax discount of John Howard and negative gearing too. Perhaps, also the generous tax breaks that the superannuation bolthole has provide the multi-millionaires. The Australian taxation system favours the propertied class and the wealthy. Obviously, because they have lobbied for changes in their interest over the years. These things don’t just eventuate by themselves. Australia is a pretty good place to live, even in a cost of living crisis, for those with plenty of money. Let’s not forget the victors in the Australian 2 speed economy.
Renters Must Rise Up & Demand More Politically
Will the other two thirds of the Australian working population continue to put up with the unfair nature of our tax system and economy? Will aspirational politics keep the greed based neoliberal policies going? Peter Dutton will be hoping so. A third of working Australians rent and we have been shafted royally by the shortages in the rental market. Short term lets have taken a chunk of the stock for more holidays for the wealthy. Increased migration into Australia has put higher demands on limited rental stocks. The failure of state government to build any social housing over the last 20 years is another contributing factor. Rents are now unaffordable for many in Australian capital cities. Nothing much is being done about this but talk. There are families living in tents on the fringes of cities. The Greens have been championing renters and it will be interesting to see if they can continue to grow in representative power along with the Teal independents. Governments are supposed to govern for all and not just the well heeled and propertied. Australia has lost its way in this regard.
So, if you like me are feeling bereft and wondering where all your savings have gone over the last couple of years. You can know that the big companies, we deal with every day, have adjudged it fair game to profit greatly during a cost of living crisis. They take no moral care for their customers, but focus entirely on increasing their profits beyond the bottom line at our expense. This is the wonderful world of private wealth over public good. Qantas not refunding cancelled flights costing millions of dollars. Qantas selling already cancelled flights. Exiting CEO Alan Joyce leaving with $24 million in his kick bag. No big Australian companies giving back JobKeeper millions despite making record revenues. Woolworth’s Brad Banducci and his $20 million golden handshake. Things are good at the top end of town in Oz! We can thank our Coalition governments and their neoliberal economic policies of the last decade and some Labor one’s too prior to that. Australians have been betrayed by their institutions and companies.
Robert Sudha Hamilton is the author of Money Matters: Navigating Credit, Debt, and Financial Freedom.
©HouseTherapy
